Daimler says it is not aware of investigations into its employees.

Mercedes-Benz reportedly probed over diesel allegations

Employees at Mercedes-Benz parent company Daimler are being investigated by German prosecutors over diesel-manipulation allegations, according to a person familiar with the matter.

The Stuttgart prosecutors' office opened the probe on Tuesday, said the person, who asked not to be identified because the information is private.

Joerg Howe, a spokesman for the Stuttgart-based manufacturer, said Daimler isn't aware that prosecutors are investigating employees.

The probe comes as German newspaper Die Zeit reported that a Daimler worker testified to Stuttgart officials that the company may have manipulated its diesel engines to cheat on emissions tests. Responding to that article earlier, Daimler said that its cars have been checked by Germany's motor authority and transport ministry and that no rule violations were found.

Carmakers have been under the spotlight since Volkswagen revealed in September 2015 that it installed software in 11 million diesel vehicles worldwide to bypass pollution rules. Authorities across Europe are focusing their attention on whether a separate technology that enables emissions controls to switch off at certain temperatures to help protect engines - widely used across the industry - violates the law.

Jan Holzner, a spokesman for the Stuttgart prosecutors, said Daimler employees are being probed for possible fraud and false advertising but declined to comment on the details.

Daimler's Mercedes-Benz unit in April agreed to a voluntary recall in Europe to fix temperature-control setups on diesel cars' emissions systems.

The move followed a probe into vehicle emissions by the German transport regulator, and also included the Volkswagen, Audi and Porsche brands as well as General Motors's Opel nameplate. A total of 630,000 cars were recalled. German environmental groups have also alleged Mercedes-Benz diesel cars breached emissions rules, which the company has refuted.

Three Cities

European probes add to German carmakers' legal challenges in the US, where the Volkswagen scandal erupted. Last year, Daimler was asked by the US Department of Justice to conduct an internal investigation into how its vehicles' emissions are measured. The company appointed Deloitte Touche Tohmatsu to help gather documents and emails to comply with the request. In December, Daimler and its Mercedes-Benz USA unit won dismissal of a US lawsuit claiming they misled consumers into buying clean diesel vehicles by misrepresenting their environmental impact.

German prosecutors in three cities are now targeting German automakers over diesel-emission issues. Officials in Braunschweig have been investigating Volkswagen employees for almost two years amid the world's biggest automotive scandal. Munich prosecutors last week raided offices of Volkswagen's Audi unit and also opened a fraud probe into the luxury brand.

Stuttgart prosecutors have been investigating since December 2015 whether employees at auto supplier Bosch participated in the manipulations. The Daimler probe is their second case over the issue.

Daimler shares fell as much as 1.5 per cent and were down 1 per cent at 69.88 euros at 4:50 p.m. in Frankfurt.